WASHINGTON—The International Monetary Fund named French Finance Minister Christine Lagarde as its next managing director, catapulting her into the middle of a deepening European debt crisis that threatens global financial markets.

Ms. Lagarde, 55 years old, who assumes the job next Tuesday, will have to lead an international institution while showing independence from her previous positions as part of the French government, with skeptics watching carefully for signs of whether she gives financially troubled European nations preferential treatment. Some emerging-market officials have already suggested Greece has won more latitude from the IMF than their countries would have received in a crisis.

The first woman and 11th consecutive European to hold the top position at the world's emergency lender, Ms. Lagarde also faces the tasks of giving developing economies more power within the IMF and helping the institution recover from the sudden resignation last month of its former chief, Dominique Strauss-Kahn, who remains under house arrest in New York City on sexual-assault charges.

The International Monetary Fund Tuesday officially named Christine Lagarde as its next director, after the French finance minister won late support from the U.S. and several major emerging-market nations. Sudeep Reddy has details.

"I will make it my overriding goal that our institution continues to serve its entire membership with the same focus and the same spirit," Ms. Lagarde said on Tuesday after her appointment. "The IMF must be relevant, responsive, effective, and legitimate, to achieve stronger and sustainable growth, macroeconomic stability, and a better future for all."

During her interview with the IMF board last week, she pushed back against complaints that her French nationality creates a potential conflict of interest in European policy debates. The IMF's managing director has an "exclusive duty of loyalty" to the fund, Ms. Lagarde said at the time. "I will not shrink from the necessary candor and toughness in my discussions with the European leaders."

Ms. Lagarde's sole rival for the job, Mexico's central banker Agustín Carstens, suggested that Ms. Lagarde, as a European, might have a conflict in dealing with European economies. "We'd have a situation where the borrowers dominate a creditor institution. I think that's an issue we should consider,'' he said earlier this month at the Peterson Institute for International Economics.

On the Agenda | Challenges facing the fund's new managing director

Negotiate a second bailout for Greece. She will bring deep knowledge of the crisis to the table, but needs to show her independence

Boost representation of emerging nations. Ms. Lagarde has said increasing the fund's legitimacy should be the 'cornerstone' of the its evolving role in the world economy.

Beef up the IMF's surveillance of the global economy and monetary system. Ms. Lagarde is well-placed to understand the challenges, having headed the G-20 finance ministers' group, which made this a priority under France's presidency.

Increase diversity at the fund. Ms. Lagarde, who will be the first woman to lead the IMF, inherits an institution shaken by Dominique Strauss-Kahn's exit. She has pledged to boost diversity at the fund.

—WSJ research

One of her first tasks as IMF chief will be to help hammer out a second bailout package for Greece. A year after the euro zone and the IMF agreed to a €110 billion ($157 billion) rescue for Greece, Athens is once again negotiating with European leaders and the IMF. This time, the aid package involves the private sector.

The Greek negotiations will give Ms. Lagarde an early opportunity to show her independence, though analysts don't expect her to deviate from her oft-stated position of supporting Greece and maintaining the integrity of the euro zone. As part of the French government, she has argued forcefully for Greece's rescue packages, and has stood firmly with France and the European Central Bank against German proposals to reschedule Greece's sovereign debt. Within Europe, France's banks are among those most exposed to Greece's debt woes.

"She has a strong knowledge of Europe's situation," said Nicolas Veron, a fellow at the Bruegel think tank in Brussels. "She will have trouble taking a stance that would be very different from the one she took as a finance minister."

One of France's longest-serving finance ministers, she played a key role from the beginning of the euro-zone debt crisis, helping bring together nearly a half-trillion euros of state guarantees to provide a safety net for ailing members of the currency area.

Speaking on French television after being named to the IMF post, Ms. Lagarde urged Greece's creditors to come to the negotiating table, in language that appeared more forceful than she had used before. "All lenders must come to Greece's bedside, but Greece must also be responsible and keep a close eye on its public finances, and those who are the most vulnerable," she said.

Incoming International Monetary Fund Managing Director Christine Lagarde tells France's TF1 her appointment is a victory for women and Greece should not exit the euro. Video courtesy of Reuters.

Ms. Lagarde still has legal questions hanging over her in her home country. Earlier this month, a French criminal court said it would decide on July 8 whether to launch a probe into accusations that Ms. Lagarde overstepped her authority as finance minister in 2007 when dealing with a controversy pitting tycoon Bernard Tapie against the French state, or to dismiss the case. She has repeatedly said her intervention was lawful and has denied any wrongdoing.

Before the IMF board picked Ms. Lagarde, the IMF's chief counsel discussed with French President Nicolas Sarkozy's office the potential risks posed by the Tapie case to allay the board's concerns, according to a person familiar with the matter. After discussing the potential for hearings at which Ms. Lagarde may have to testify and the circumstances surrounding the case, the board was ultimately satisfied by the facts, this person said. Regardless, Ms. Lagarde told the board she would waive the diplomatic immunity that the managing director's position gives the holder, he said.

The IMF's 24-person executive board used its traditional "consensus" approach, rather than a formal vote, to settle on Ms. Lagarde over Mexico's Mr. Carstens.

The U.S. government's endorsement of Ms. Lagarde on Tuesday morning sealed the appointment, giving her clear backing from governments casting more than half the IMF's votes. Treasury Secretary Timothy Geithner said her "exceptional talent and broad experience will provide invaluable leadership for this indispensable institution at a critical time for the global economy."

After her appointment was announced, Mr. Carstens said, "I hope that under Ms. Lagarde's direction, the IMF will make meaningful progress in strengthening the governance of the institution, so as to assure its legitimacy, cohesiveness, and ultimately, its effectiveness."

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